Hong Kong is rewriting its tax playbook for hedge fund managers, and the headline number is zero. The city plans to extend its carried interest tax concession, currently reserved for private equity funds, to a much broader universe of asset managers, effectively eliminating a 17% profits tax on performance-related income.
What’s actually changing
Hong Kong already offers a 0% profits tax rate on carried interest for qualifying PE funds. But hedge fund managers, credit fund operators, and VC firms have been stuck paying the standard profits tax rate of up to 17% on the same type of income.
The proposed reforms would flatten that disparity. All qualifying alternative asset managers would get the same 0% treatment on performance fees, regardless of strategy. The expansion also notably includes managers dealing in virtual assets.
The legislative framework is expected to come through draft legislation following consultations that began in 2024, with updates reportedly progressing through March 2026.
